Issues

Federal Legislative Alert on H.R. 1304

Federal lawmakers will vote on legislation next week ( HR1304) that would give physicians unprecedented power that would result in higher costs for your clients and cause some employers to drop health insurance all together.

Issue: Sponsored by Rep. Tom Campbell (R-CA), HR 1304, which currently has over 200 cosponsors, would give doctors a tremendous advantage in gaining higher health plan contract fees for their services by exempting them from current anti-trust laws, which will ultimately increase health care costs for your employer clients and their employees. At a time when carriers already are handing out double-digit rate increases, these additional cost increases could cause some employers to drop coverage altogether.

Action Needed: Call, e-mail, fax, or mail your representatives NOW, expressing your opposition to HR 1304. Go to the NAHU Website at www.nahu.org and click on Operation Shout. Then click on the Legislative Alert icon at the top of the page, and choose the "Oppose HR 1304 Physicians Anti-Trust" option. You will find this alert there - and by clicking on the "Contact Your Elected Officials" icon, you can send the sample letter at the back of this alert to your Members of Congress.

You can use the following talking points when you correspond with your representative's office:

Talking Points - HR 1304 - Physician Unions

• As an agent, I know how employers struggle to provide high quality, affordable health coverage to their employees. Giving doctors new power to band together to negotiate higher rates will only mean higher costs for my clients and their employees.

• In many areas of the country, particularly in rural areas, consumers have already been faced with lack of access to affordable health care which is worsened as a result of physicians' refusal to negotiate with managed care plans or setting fees higher than found in neighboring metropolitan areas. The Congressional Budget Office has also reported that doctors who would bargain under the stipulations of HR 1304 would see their fees increase by 15% or more. This increase in fees will ultimately be passed on to health plan enrollees. Increases such as these could result in my clients' inability to afford their health insurance policies.

• At a time when the number of uninsured is growing, and health insurers are handing out double-digit rate increases, it is outrageous that the House would consider a move to increase doctors' incomes.

• Giving doctors special treatment and unprecedented power flies in the face of the free market system, and is bad for employers, consumers, and the economy as a whole. I urge you to oppose HR 1304.

Sample Letter

HR 1304 - Oppose A Physicians Anti-Trust Exemption

June 23, 2000

Dear (name to be determined):

I am very concerned that the House may pass legislation allowing physicians to form unions and bargain collectively to win higher fees. As an agent, I know how employers struggle to provide high quality, affordable health coverage to their employees. Giving doctors new power to band together to negotiate higher rates will only mean higher costs for my clients and their employees.

At a time when the number of uninsured is growing, and health insurers are handing out double-digit rate increases, it is outrageous that the House would consider a move to increase doctors' incomes. Giving doctors special treatment and unprecedented power flies in the face of the free market system, and is bad for employers, consumers, and the economy as a whole. I urge you to oppose HR 1304.

I would appreciate hearing your views on this important issue.

Sincerely,

(your name here)

Summary of HR 1304

The bill would grant to health care professionals who are engaged in negotiations with a health plan (including group health plans, health insurance issuers, and Medicare+Choice and Medicaid managed care plans) an exemption under the antitrust laws similar to that granted to bargaining units recognized under the National Labor Relations Act ("NLRA").

The bill undermines efforts to control health care costs for consumers and to provide consumers with a wide range of choices among health care plans. The bill does not protect patients' rights or assure that the legitimate concerns of health care professionals will be addressed. Instead, it provides incentives for health care professionals, such as doctors and pharmacists, to engage in price-fixing, boycotts and market allocation agreements that would otherwise be illegal under the antitrust laws. Such conduct will result in higher health care costs for patients, employers, and the Medicare and Medicaid programs. Also, it will permit such cartels to negotiate unfair and exclusionary agreements with health plans that could put non-physician providers, in particular, at an unfair competitive disadvantage.

Facts About HR 1304

Did you know that…

… H.R. 1304 would allow doctors to collude and fix prices? Proponents of H.R. 1304 argue that the bill would not let them fix prices. They say that H.R.1304 only immunizes joint negotiations with health plans, and therefore physicians would not be able to set fees across the board. What they don't tell you is that, through these negotiations, physicians could legally agree with each other on the level of fees that they find acceptable with each plan - that is, they could collude on prices. And through these joint negotiations, they could threaten to collectively refuse to deal with a health plan; that is, if the plan refuses to meet their terms, they could boycott the plan. Finally, there would be nothing that could effectively be done to prevent the physicians, having fixed the prices they are willing to charge to one health plan, to use that same fee schedule for their dealings with all health plans, thereby setting their fees across the board.

… H.R. 1304 would result in increased consumer costs by increasing doctors' fees? Price-fixing by doctors will drive the costs of medical care higher. How much higher? It depends on whom you ask. A June 1999 study by Charles River Associates estimates that H.R. 1304 would result in an increase in the fees physicians charge patients of up to 25%. Testifying against H.R. 1304 last year before the House Judiciary Committee, Assistant Attorney General Joel Klein stated: "Our investigations reveal that when health care professionals jointly negotiate with health insurers, without regard to antitrust laws, they typically seek to significantly increase their fees, sometimes by as much as 20% - 40%. " The FTC recently broke up a cartel of surgeons in Austin, Texas, which used a boycott of a Blue Cross plan to gain a 30% increase in fees. The result, according to the FTC, was to increase costs to consumers for surgical services by $1,000,000. The Congressional Budget Office (CBO) took a conservative line, estimating an increase in payments to physicians of only 15%.

This increase in costs will be passed on to consumers in the form of higher premiums, lower wages, reductions in non-health fringe benefits, and higher out-of-pocket health care costs, according to CBO.

…H.R. 1304 could lead to the elimination of consumer protections like bans on balance billing? H.R. 1304 will give physicians the means to force insurers to eliminate contractual provisions that limit 'balance billing." What is balance billing? It's doctors billing patients more for a service than an insurance company will pay. Let's say that a doctor has contracted with an insurance company to accept a $100 fee for a particular service. A prohibition on "balance billing" means that a doctor must accept that $100 fee as payment in full. Without a prohibition on balance billing, the doctor could take the $100 payment from the insurance company and then bill his patient an additional amount -- $20, $30, $40 or more - for the same service. This protection is worth hundreds of millions of dollars to consumers. It is a major means by which insurance companies protect their subscribers from price gouging. If Congress grants physicians an exemption from federal antitrust law and allows physicians to collectively bargain, these critical contractual protections for consumers will be an early target of organized medicine.

… H.R. 1304 would increase doctor fees at the expense of providing services to patients? Although it is assumed that H.R. 1304 would result in only a 15% increase in payments to doctors and that the bill would sunset after three years, CBO estimated that the bill would increase direct federal spending on health care by more than $2.6 billion over 10 years. This windfall for physicians, if spent directly on additional medical services over the same 10-year period, could purchase:

• over 450,000 days of treatment in a neonatal intensive care unit; § more than 35 million mammograms;
• over 19 million units of blood;
• more than 14 million colonoscopies; or
• more than 56 million PSA prostate cancer tests.

… H.R. 1304 would reduce the number of low-income children who are covered under the State Childrens' Health Insurance Program (SCHIP)? CBO estimates that the higher fees collected by physicians will cost the Medicaid and S-CHIP programs more than $2.4 billion over the 10-year period. This same $2.4 billion, if spent directly on providing coverage to children during this period, would provide health insurance coverage to 140,000 children every year over the same 10-year period.

… H.R. 1304 would NOT prohibit doctors from engaging in strikes? The bill does not prohibit doctors who are members of labor unions from organizing strikes. Such doctors have the right to strike under the National Labor Relations Act. They would retain that right under H.R. 1304. Paragraph 2(c)(1) says that the bill "shall not confer any new right to participate in any collective cessation of services to patients." Since unionized physicians have an existing right to strike, they don't need H.R. 1304 to create any new right.

… H.R. 1304 would permit doctors to engage in boycotts that limit consumer choice and drive up prices? What about doctors who are not employees and therefore cannot unionize? Since they are employers or independent contractors, they have no one against whom to organize a strike. So H.R. 1304 makes it legal for them to participate in boycotts. The effect on the patient of a boycott is similar to that of a strike. Someone enrolled in a plan that is being boycotted by their personal physician must choose between not seeing their doctor or paying him or her directly, without being able to use their insurance coverage (assuming their doctor will agree to treat a patient who is not insured).

…H.R. 1304 would not "level the playing field" between health plans and physicians? Advocates of H.R. 1304 argue that, since insurers are have an antitrust exemption under the McCarran-Ferguson Act, doctors should be granted an antitrust exemption as well. Some have gone so far as to allege that insurers are permitted under this exemption to collectively decide what they will pay doctors for medical services.

None of these allegations is true. The exemption provided by McCarran-Ferguson merely preserves the authority of states to regulate 'the business of insurance." It does not protect insurers from antitrust scrutiny when they are involved in mergers and does not apply to relationships between insurers and providers. It does not permit collusion or price-fixing.

FTC Chairman Robert Pitofsky made this clear when he told the House Judiciary Committee last year, "The Supreme Court has held an insurance company's agreements with providers on the fees they will be paid are not 'the business of insurance' and thus are not covered by the McCarran-Ferguson immunity. It seems clear, therefore, that collusion among insurers on such agreements likewise would not be protected by the Act."

Assistant Attorney General Joel Klein similarly testified, "McCarran does not exempt insurers' dealings with health care providers from antitrust scrutiny. To the extent insurers' dealings with health care professionals are in violation of the antitrust laws, McCarran provides no obstacle to prosecution of such claims either by the affected providers or by state or federal enforcement agencies. When the [Justice Department's Antitrust] Division learns about exclusionary or collusive activities among health plans, it carefully reviews them and, if necessary, takes appropriate action. In the past few years alone, the Division aggressively challenged contractual provisions imposed by payers on Rhode Island dentists … and Cleveland area hospitals."

… H.R. 1304 would overturn the Texas antitrust law which permits doctors to bargain collectively with health plans? The State of Texas last year passed a bill that would permit doctors to bargain collectively with health plans. Many people mistakenly believe that H.R. 1304 is similar to the Texas law. Nothing could be further from the truth. Here are some of the salient differences:

How many providers the negotiator can represent? Texas Law: 10% of physicians in a health plan's service area, except if State Attorney General sets higher or lower figure. H.R. 1304: No limitation on number of physicians or on the service area (a cartel representing every doctor in the country would be permitted).

What terms can be collectively negotiated? Texas Law: 16 enumerated "non-fee related" subjects, unless the State AG has found that health plan has substantial market power and terms that would otherwise threaten quality and access. H.R. 1304: No limitation on what can be discussed - including fees - regardless of whether a health plan has substantial market power. Who must approve the results of the negotiation? Texas Law: State Attorney General. H.R. 1304: No one.

Can providers negotiate fee-related terms with Medicaid plans? Texas Law: No. H.R. 1304: Yes. The bill as reported by the Judiciary Committee prohibits negotiations over benefits, not over fees. Thus, CBO has scored the bill as increasing direct federal spending for Medicaid and other federal health programs by $2.5 billion over 10 years, even if the bill were to sunset after three years.

Most importantly, adoption of H.R. 1304 would preempt application of the Texas law. The State of Texas is seeking an exemption from federal antitrust laws for physicians, proposing to substitute state regulation for federal antitrust enforcement. If H.R. 1304 were to pass, federal antitrust law would no longer apply to doctors, and the state could not enforce any of the limitations and safeguards that they state currently has in place.

… H.R. 1304 would adversely affect the Medicare program and result in seniors paying MORE for prescription drugs? In a letter to Speaker Hastert, Ways and Means Health Subcommittee Chairman Bill Thomas and Ranking Democratic Member Pete Stark described the adverse affect that H.R. 1304 would have on Medicare beneficiaries. According to the letter, the bill:

"will have significant adverse effects on Medicare and the 38 million seniors who depend on the program to get needed health services.... H.R. 1304 would likely result in increased out-of-pocket expenses and less prescription drug access for Medicare beneficiaries who now obtain care in Medicare+Choice …

"Even if the bill was modified to affirmatively exclude Medicare+Choice plans from the scope of H.R. 1304, Medicare beneficiaries may still be exposed to higher monthly premiums and decreased benefits due to the fact that increased cost-shifting may occur as health plans are faced with higher physician costs in their private sector products."

… H.R. 1304 is opposed by nonphysician providers, including most groups representing advanced practice nurses? Proponents of H.R. 1304 continually insist that they have allayed the concerns that nonphysician providers, including advanced practice nurses, have about the measure. In reality, most groups representing nonphysician providers continue to oppose H.R. 1304, despite the Judiciary Committee's adoption of the Nadler amendment. In a May 19 letter to Congress, the following organizations reiterated their opposition to H.R. 1304: American Academy of Nurse Practitioners, American College of Nurse Midwives, American College of Nurse Practitioners, American Nurses Association, Association of Women's Health, Obstetric and Neonatal Nurses, National Association of Hispanic Nurses, National Association of Nurse Practitioners in Women's Health, and the National Black Nurses Association.

… H.R. 1304 is opposed by legal experts, including the Justice Department, the Federal Trade Commission, the Antitrust Division of the ABA, and the American Antitrust Institute?

FTC Chairman Robert Pitofsky:

"The bill, while appealing in its apparent simplicity, threatens to cause serious harm to consumers, to employers, and to federal, state and local governments." Assistant Attorney General, Antitrust Division, Joel Klein: "The bill's potential adverse economic impact on consumers is large. Our investigations reveal that when health care professionals jointly negotiate with health insurers, without regard to antitrust laws, they typically seek to significantly increase their fees, sometimes by as much as 20%-40%."

American Bar Association, Antitrust Division:

"The Act would protect price-fixing, group boycotts, and market and customer allocations, which occur through negotiations with health plans, and which otherwise could be deemed illegal per se under established anti-trust principles."

American Antitrust Institute:

"Any benefits of the bill, we feel, would be more than outweighed by its predictable harms. Substantially higher health care costs would be borne by the many consumers who would suddenly be subject to cartel pricing, including those for whom any quality-related benefits of the bill would be small or nonexistent."

For all of these reasons, HR 1304 should be defeated.